George Okello Candiya Bongomin

Mobile Money and Financial Inclusion in Sub-Saharan Africa: the Moderating Role of Social Networks

ABSTRACT The purpose of this article is to test the moderating effect of social networks in the relationship between mobile money usage and financial inclusion in rural Uganda. The results revealed that there is a significant and positive moderating effect of social networks in the relationship between mobile money usage and financial inclusion in rural Uganda. Besides, mobile money usage and social networks have direct and significant effects on financial inclusion in rural Uganda. Thus, the findings suggest that existence of social networks of strong and weak ties among mobile money users promote financial inclusion in rural Uganda. Previous studies have concentrated only on investigating the impact of mobile money in promoting financial inclusion in developing economies, especially in Sub-Saharan Africa. However, this particular study introduces the moderating effect of social networks in the relationship between mobile money usage and financial inclusion in rural Uganda, which seems to be sparse and lacking in literature.

Institutional frames for financial inclusion of poor households in Sub-Saharan Africa: Evidence from rural Uganda

Purpose The purpose of this paper is to examine institutional frames for financial inclusion of poor households in a Sub-Saharan Africa context and provide policy implications in solving the persistent problem of limited inclusion of poor households into mainstream formal financial services in Uganda. Design/methodology/approach Cross-sectional research design was used in this study. Data were collected from a randomly selected sample of 200 poor households located in Mukono District. Statistical program for Social Scientists and Analysis of Moment Structures were used to generate results. Findings Results have revealed the presence of regulative, normative, and procedural and declarative cognitive institutional frames, which affect financial inclusion of poor households in rural rural Uganda. The findings and policy implications are discussed in detail in the paper. Originality/value This study parallels the World Bank Global Findex survey (2012) on general aspects of financial inclusion around the world. It examines frames, which structure behaviours and actions of poor households towards their financial decisions and choices in attempting to improve financial inclusion with a major focus on rural Uganda.

Financial Inclusion in Rural Uganda: Testing Interaction Effect of Financial Literacy and Networks

ABSTRACT Based on the premise that financial literacy take place in networks to influence the level of financial inclusion, the study examined whether networks moderate in the relationship between financial literacy and financial inclusion among poor households in rural Uganda. Studies have revealed that financial literacy affects the level of financial inclusion. However, these studies have failed to incorporate the moderating role of networks in the relationship between financial literacy and financial inclusion. The results showed that networks positively and significantly moderates in the relationship between financial literacy and financial inclusion with both financial literacy and networks having direct and significant effects.

Determinants of SMMEs growth in post-war communities in developing countries: Testing the interaction effect of government support

Purpose The purpose of this paper is to test the interaction effect of government support in the relationship between business skills, capital adequacy, access to finance, access to market, entrepreneurial education, and small, medium, and micro enterprises (SMMEs) survival in post-war communities in Northern Uganda. Design/methodology/approach Cross-sectional research design was used in the study and quantitative data were collected from 304 SMMEs located in Gulu District using a semi-structured questionnaire. Structural equation modeling (SEM) through the use of analysis of moment structures was adopted to establish the interaction effect of government support in the relationship between business skills, capital adequacy, access to finance, access to market, entrepreneurial education, and SMMEs survival in post-war communities in Northern Uganda. Furthermore, Pearson’s correlation analysis was used to show the association between the variables under study. Findings The results revealed that there is a significant interaction effect of government support in the relationship between business skills, capital adequacy, access to finance, access to market, entrepreneurial education, and SMMEs survival in post-war communities in Northern Uganda. Besides, the results indicated that business skills, capital adequacy, access to finance, access to market, entrepreneurial education, and government support have significant and positive impacts on SMMEs survival in post-war communities in Northern Uganda. Research limitations/implications The study employed cross-sectional research design, thus, ignoring longitudinal study approach. Besides, the sample was selected from only Gulu District, therefore, leaving out other Districts located in Northern Uganda. Practical implications Advocates of recovery programs and interventions in developing countries should consider government support as a vital factor in promoting business skill, capital adequacy, access to finance, access to market, and entrepreneurial education in order to enhance SMMEs growth in post-war communities. In addition, governments in developing countries should offer investment incentives and tax waivers to infant SMMEs in post-war communities like in Northern Uganda. Originality/value The study examined the interaction effect of government support in the relationship between business skills, capital adequacy, access to finance, access to market, entrepreneurial education, and SMMEs survival in post-war communities in developing countries. Thus, to the best of the authors’ knowledge, this is the first attempt to test the interaction effect of government support in the relationship between business skills, capital adequacy, access to finance, access to market, entrepreneurial education, and SMMEs survival in post-war communities in Northern Uganda. The use of government support as a moderator in the relationship between business skills, capital adequacy, access to finance, access to market, entrepreneurial education, and SMMEs survival is scarce in entrepreneurship literature and theory. This creates uniqueness in this study.

The relationship between access to finance and growth of SMEs in developing economies: Financial literacy as a moderator

The purpose of this paper is to establish the moderating effect of financial literacy in the relationship between access to finance and growth of small and medium enterprises (SMEs) in developing economies. Thus, this study seeks to establish whether financial literacy moderates the relationship between access to finance and growth of SMEs in a developing economy like Uganda.,Cross-sectional research design was used in the study and data were collected from 169 SMEs located in Jinja and Iganga central markets. ModGraph (excel programme) was used to test for the moderating effect of financial literacy in the relationship between access to finance and growth of SMEs in developing economies.,The findings reveal a positive and significant moderating effect of financial literacy in the relationship between access to finance and growth of SMEs in developing economies. In addition, financial literacy and access to finance also have significant and positive effects on growth of SMEs in developing economies.,The study collected data from only SMEs located in Uganda, and there is an opportunity to test this finding in other developing economies. Furthermore, the findings from the study are based on quantitative data collected through use of semi-structured questionnaires. Besides, the study was purely cross-sectional; hence, it ignores the characteristics of SMEs, which could be investigated using a longitudinal study design.,The study highlights the importance of financial literacy in promoting access to finance, which is necessary for the growth of SMEs in developing economies. Owners of SMEs could attend financial literacy programmes provided by entrepreneurial skill development organizations to enable them to acquire financial knowledge and skills to make wise and better financial decisions and choices.,The study contributes to existing international entrepreneurship literature by indicating the moderating effect of financial literacy in the relationship between access to finance and growth of SMEs in developing economies. The study shows that for SMEs to access finance to grow there is a need for financial literacy that promotes effective and efficient use of loans/credits. SMEs in developing economies need financial literacy, which helps them make wise financial decisions and choices before accessing financial services like loans.

Social capital: mediator of financial literacy and financial inclusion in rural Uganda

Purpose The purpose of this paper is to examine the mediating role of social capital in financial literacy and financial inclusion relationship in rural Uganda. The major aim is to establish the role of social capital in the relationship between financial literacy and financial inclusion. Design/methodology/approach The paper adopts and uses MedGraph programme (Excel version 3.0), Sobel and Kenny and Baron tests to test the mediation effect of social capital in the relationship between financial literacy and financial inclusion. Findings The results reveals that social capital is a significant mediator in the relationship between financial literacy and financial inclusion of rural poor in Uganda. Financial literacy did not have a direct effect on financial inclusion, but through full mediation of social capital. Existence of social capital into the relationship boosts the relationship between financial literacy and financial inclusion by 61.6 per cent among rural poor households in Uganda. Thus, the finding suggests that with the absence of social capital, financial literacy may fail to enhance the level of financial inclusion among rural poor households in Uganda. Research limitations/implications This study adopted only single research approach using a questionnaire. However, future research through interview may be of importance. Besides, for the purpose of triangulation, a study involving financial institutions’ staff may be viable. Moreover this study was limited by the fact that it was cross-sectional. Furthermore, a longitudinal study may be useful in future to investigate the mediating impact of social capital spanning over a long period of time. Practical implications Managers, policymakers and financial inclusion practitioners should advocate and embark on building social capital among rural communities, so as to improve on the level of financial inclusion. Originality/value While a large body of research has been carried out on financial literacy, this paper is the first to test the mediating role of social capital in the relationship between financial literacy and financial inclusion, especially in rural Uganda. This study generates evidence and contributes to the powerful influence of social capital in enhancing the level of financial inclusion based on financial literacy.

Institutions and Financial Inclusion in Rural Uganda: the Mediating Role of Social Capital

ABSTRACT The study examined the mediating role of social capital in the relationship between institutions and financial inclusion of poor households in rural Uganda. Cross-sectional design was adopted and data were collected and analyzed using SPSS/20, MedGraph and Sobel-z test. The findings indicated that social capital partially mediates the relationship between institutions and financial inclusion. Besides, institutions and financial inclusion are significantly related. Thus, managers of financial institutions, financial inclusion working groups, and policy makers should pay more attention to the role of social capital in promoting cooperative behavior among the poor in accessing scarce resources such as financial services.

Exploring the mediating role of social capital in the relationship between financial intermediation and financial inclusion in rural Uganda

Purpose The purpose of this paper is to establish the mediating role of social capital in the relationship between financial intermediation and financial inclusion in rural Uganda. Design/methodology/approach The current study used cross-sectional research design and a semi-structured questionnaire was used to collect data for this study. The study applied structural equation modeling through bootstrap approach in AMOS to establish the mediating role of social capital in the relationship between financial intermediation and financial inclusion. Findings The results indicated that social capital significantly mediates the relationship between financial intermediation and financial inclusion in rural Uganda. Therefore, it can be deduced that social capital among the poor play an important role in promoting financial intermediation for improved financial inclusion in rural Uganda. Research limitations/implications Although the sample was large, it may not be generalized to other segments of the population. Data were collected from only poor households located in rural Uganda. Besides, the study was cross-sectional, thus, limiting efforts in investigating certain characteristics of the sample over time. Perhaps future studies could adopt the use of longitudinal research design. Practical implications Financial institutions such as banks should rely on social capital as a substitute for physical collateral in order to promote financial inclusion, especially among the poor in rural Uganda. Originality/value This study provides empirical evidence on phenomenon not studied in rural areas in Sub-Saharan Africa where the poor use social capital embedded in customs and norms for doing business. The results highlight the importance of social capital in mediating the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.

Nexus between financial literacy and financial inclusion: Examining the moderating role of cognition from a developing country perspective

Premised on the argument that cognition structures the way how individuals think and make decisions, the purpose of this paper is to test the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda.,The study used cross-sectional research design and quantitative data were collected and analyzed using Statistical Package for Social Sciences. Baron and Kenny guidelines were adopted to test for existence of moderating effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda. Furthermore, ModGraph excel software was used to establish the magnitude of moderating effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda.,The results revealed that cognition significantly moderate the relationship between financial literacy and financial inclusion of the poor in rural Uganda. In addition, both cognition and financial literacy also have direct effects on financial inclusion of the poor in rural Uganda.,The study adopted cross-sectional research design and data were collected by use of only questionnaires. Future studies through longitudinal research design may be employed. Besides, further studies using interviews may be adopted. Furthermore, this study collected data from only tier 3 financial institutions, thus, ignoring the other financial institutions. Future studies could focus on financial institutions under the other tiers.,The findings from the study enlightens policy-makers, managers of financial institutions, and financial inclusion advocates on the importance of cognition in enhancing financial literacy among the poor, especially in rural Uganda. Cognition combined with financial literacy helps the poor to make wise financial decisions and choices toward consuming financial services and products provided by formal financial institutions. This leads to increased scope of financial inclusion of the poor in rural Uganda. Therefore, advocates of financial literacy should assess community cultural cognition and utilize them to design and fashion effective financial literacy interventions that can promote financial inclusion.,The study uses Baron and Kenny and ModGraph excel software to test for the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda. While several studies exist worldwide on financial inclusion, this study is the first to test the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural areas in a developing country context.

Financial literacy in emerging economies: Do all components matter for financial inclusion of poor households in rural Uganda?

Purpose - The purpose of this paper is to examine the impact of individual components of financial literacy in promoting financial inclusion of poor households in rural Uganda. Design/methodology/approach - The study was cross-sectional combined with correlation and regression analyses. Data were collected from 400 poor households drawn from four regions in rural Uganda. Hierarchical regression analysis was used to test for the contribution of individual components of financial literacy on financial inclusion of poor households in rural Uganda. In addition, confirmatory factor analysis was used to establish existence of convergent validity between the items used to measure the different constructs under study. Furthermore, analysis of variance was also adopted to test for variation in perceptions of poor households on being financially included. Findings - The results generated from the study revealed that only attitude as a component of financial literacy significantly and positively predicts financial inclusion of poor households in rural Uganda. Contrary to previous thinking and empirical studies, behavior, knowledge, and skills are not significant predictors of financial inclusion of poor households in rural Uganda. Overall, the combined effect of the different components of financial literacy explains about 11.2 percent of the variance in financial inclusion of poor households in rural Uganda. Research limitations/implications - The study was not without limitations. The study adopted only cross-sectional study design, thus, leaving out longitudinal study. Therefore, future studies employing longitudinal research design worth undertaking. Furthermore, the sample although large enough focused only on poor households located in rural Uganda, therefore, ignoring peri-urban and urban areas in Uganda. Besides, the study used only quantitative data, thus, qualitative study using key informant interviews may be considered for further research. Practical implications - The paper indicates that policy makers, advocates of financial inclusion and researchers, should reconsider investigating individual contribution of the different components of financial literacy in promoting financial inclusion of poor households in rural Uganda. For researchers, it is important to re-analyze the individual components of financial literacy of behavior, knowledge, skills, and attitude in influencing financial inclusion of poor households in rural Uganda. Originality/value - This paper combines both functional components (behavior and attitude) and non-functional measures (knowledge and skills) of financial literacy to explain financial inclusion of poor households in rural Uganda. Most financial literacy studies have mainly adopted only non-functional measures of knowledge and skills. Besides, these studies ignore the individual contribution of functional components and non-functional measures of financial literacy in explaining financial inclusion of poor households. Thus, this study is the first to examine the impact of individual components of financial literacy in explaining financial inclusion of poor households in rural Uganda.